Recommended Weekend Reads
What Is President Trump’s Golden Dome and Will It Work? China’s Investments in EU and UK Rebounded in 2024, Latin America’s Baby Bust is Coming Early, and Understanding the Two Chinas
Summer is just about here and we are hoping you are having a relaxing Memorial Day Weekend. Below are our latest recommended reads. We hope you have a wonderful Easter and a relaxing weekend. And please let us know if you or someone you know wants to be added to our distribution list.
President Trump’s Golden Dome
The Golden Dome and the New Missile Age Center for Strategic and International Studies Podcast
President Donald Trump has proposed to create a multilayered defense system capable of intercepting missiles even if they are launched from the other side of the world and even if they are launched from space. The concept includes both ground and space-based capabilities that would defend the US from attack by detecting and destroying them ahead of launch, intercepting them early in flight, halting them midcourse and stopping them in the last few moments of approaching a target. CSIS’s podcast takes a closer look at the President’s proposal and how it would be implemented, how much it will cost, and how it cannot work unless Canada is a part of it.
Golden Dome for America: Revolutionizing U.S. Homeland Missile Defense Lockheed Martin
Defense contractor Lockheed Martin hopes to be the primary builder of President Trump’s Golden Dome missile defense system. IN a recent post on their website, they offer an in-depth presentation of the multiple ways the Golden Dome, as they envision it, would be deployed in space, land, sea, and air.
Bad News for Trump’s Golden Dome: He Can’t Build it without Canada Politico
President Donald Trump left out a key detail this week when he outlined his plans for a massive missile and air defense shield over the continent: He can’t build it without Canada. And it’s not clear America’s northern neighbor wants in.
Can China’s New Stealth Tech Challenge Trump’s Golden Dome? South Morning Chian Post
Chinese scientists have unveiled a new material that could undermine the effectiveness of the new US missile defense system – known as the Golden Dome – proposed by President Donald Trump. The material may be used as a stealth material that is effective against both infrared and microwave detection and could prove suitable for high-speed aircraft and missiles.
Asian-Pacific Economics
There are Two Chinas, and America Must Understand Both New York Times
Two Chinas inhabit the American imagination: One is a technology and manufacturing superpower poised to lead the world. The other is an economy that’s on the verge of collapse. Each reflects a real aspect of China. resident Trump, as he tries to negotiate a resolution of a trade war, must reckon with both versions of America’s arch geopolitical rival. The stakes have never been higher to understand China. It’s not enough to fear its successes or take solace in its economic hardships. To know America’s biggest rival requires seeing how the two Chinas are able to coexist.
A Geo-Economic Conundrum for the Member States of ASEAN International Institute of Strategic Studies
When leaders from Southeast Asia meet at a regional summit on 26–27 May in Kuala Lumpur, the sense of imminent crisis will have lifted, given the agreement announced by Beijing and Washington on 12 May to pause for 90 days their ongoing trade dispute. Yet anxiety will still be high. Another 90-day pause – on the ‘reciprocal tariff’ schedule announced by United States President Donald Trump in April – will expire on 8 July. All ten member states of the Association of Southeast Asian Nations (ASEAN) would face significant new tariffs under the schedule, with Cambodia, Laos, Thailand, and Vietnam being the hardest hit. Vietnam, facing a 46% tariff unless it reaches a bilateral deal with the US, might have the most to lose given its increasingly prominent position in supply chains serving the US market.
Chinese Investment Rebounds Despite Growing Frictions Mecator Institute for China Studies/Rhodium Group
Chinese foreign direct investment (FDI) in the EU and UK rebounded last year for the first time since 2016: it reached EUR 10 billion, rising 47 percent from 2023. Europe remained the leading destination for Chinese investment in high-income economies, drawing 53.2 percent of all Chinese FDI in such markets. In 2024, the EU and UK’s share of total Chinese FDI also rose to 19.1 percent, the first significant increase since 2018. The growth of Chinese FDI in the EU and UK was driven by a slight recovery in mergers and acquisitions (M&A) activity and continued appetite for greenfield investment. Greenfield investment increased for the third consecutive year, rising by 21 percent year-on-year and hitting a record high of EUR 5.9 billion. 2024, five investors—CATL, Tencent, Geely, Envision, and Gotion—accounted for almost half of the Chinese FDI in Europe.
Latin America
When Recession is Not Mexico’s Biggest Problem Americas Quarterly
The “R” word is becoming increasingly popular in Mexico. On the same day that the U.S. reported a surprising quarterly GDP contraction in the first trimester of the year, data released by Mexico’s statistics institute, INEGI, showed an unexpected 0.2% quarterly economic expansion for the same period. Since this initial and seasonally adjusted reading followed a 0.6% decline in economic output in the last quarter of 2024, it appears Mexico barely escaped the curse of a so-called “technical recession” (i.e., two consecutive quarters posting negative changes). This result, however, is unlikely to settle the issue, particularly in Mexico’s polarized political climate. It can be easily argued, for instance, that the positive reading is explained by an unusually strong 8.1% growth rate posted by the volatile primary sector. This serves as a good reminder that business cycles are a more complex affair than a simple rule of thumb would suggest. More importantly, a discussion about this issue should not be Mexico’s main priority.
Latin America’s Baby Bust is Arriving Early Bloomberg
Data published in the past few weeks confirm the quick decline in the region’s fertility levels, with the number of births in Brazil falling to the lowest in close to 50 years. In Argentina, the number of newborns has almost halved in just a decade, with kindergartens struggling to find pupils. In 2024, Uruguay had more deaths than births for the fourth consecutive year. Even Bolivia, a country of traditionally large families, is about to fall below the 2.1 children-per-woman threshold necessary to keep its population constant.
The Spy Factory – Russian Intelligence’s Use of Brazil for Deep Cover Operations New York Times
For years, a New York Times investigation found, Russia used Brazil as a launchpad for its most elite intelligence officers, known as illegals. In an audacious and far-reaching operation, the spies shed their Russian pasts. They started businesses, made friends and had love affairs — events that, over many years, became the building blocks of entirely new identities. Major Russian spy operations have been uncovered in the past, including in the United States in 2010. This was different. The goal was not to spy on Brazil, but to become Brazilian. Once cloaked in credible back stories, they would set off for the United States, Europe or the Middle East and begin working in earnest. The Russians essentially turned Brazil into an assembly line for deep-cover operatives.
Geoeconomics
Unconventional Monetary Policies in Small Open Economies Jesper Lindé/Marcin Kolasa/Stefan Laseen IMF Working Papers
This paper provides a comprehensive assessment of the macroeconomic and fiscal impact of unconventional monetary tools in small open economies. Using a DSGE model, we show that the exchange rate plays a critical role to amplify the favorable impact of unconventional monetary policy while it attenuates the effectiveness of conventional fiscal policy to jointly boost output and inflation. We then use the model as a laboratory to do a case study of the Swedish Riksbank asset purchases and negative policy rates 2015-2019. We find that the Riksbank unconventional policy measures provided meaningful macroeconomic stimulus to economic activity and inflation, with the dual benefit of reducing overall government debt by about 5 percent of GDP. If conventional fiscal policy had been used to provide a commensurate output boost, inflation would have risen notably less, and the fiscal cost would have amounted to a deterioration of the government debt position with nearly 8 percent of GDP.
What Have We Learned from the U.S. Tariff Increases of 2018-19? Reserve Bank of St. Louis “On the Economy” Blog
In the summer of 2018, the normal pace of global trade encountered an important disruption: The United States increased tariffs to a wide set of imported goods from China, which included such diverse products as electronics, furniture, manufacturing equipment and aerospace components. In this way, the imposed tariffs impacted final consumption goods, intermediate inputs and capital goods used by U.S. households and firms. All told, these measures affected approximately $376 billion of Chinese exports to the U.S., or around 50% of all the country’s imports from China. The scale becomes even more remarkable when one considers that prior to this campaign, most of these goods faced tariffs of just 3% to 4% and that China was the largest trading partner of the U.S. in terms of imports.
